Home » Finance

Important Debt Settlement Facts

May 30, 2008
Many consumers in America find themselves buried in increasingly higher debt and at some point looking for debt help. Their monthly unsecured debt payments are growing in both principal and interest, and they are finding it more difficult to make the monthly payments. As a result, these late payments are impacting their credit score and they are ending up with bad credit.

First of all, let's talk about unsecured debt and what qualifies for a debt settlement program. The first and most obvious problem for people is their credit card debt. Additionally, past medical bills, payday loans, other unsecured loan not backed by the government, past due rent, etc. can all add up as debt that you cannot get away from. Secured loans such as a mortgage or auto loan do not qualify, nor does student loans.

So what exactly are your options? The first and best choice would be to control your spending, tighten your belt, and as quickly as possible make pay down your unsecured debt. Although its sounds good, sometimes this is just not achievable for many reasons. Bankruptcy laws have changed and it is much more difficult to declare bankruptcy, and it is a stigma that will stick with you for up to 10 years. For most looking to avoid bankruptcy, debt settlement is often a great alternative.

Debt settlement reduces your monthly payment into one manageable payment. That payment gets set aside until you accumulate a large enough chunk so the attorneys can start to settle your outstanding debt. This is usually a onetime payment; typically most of these companies are willing to settle from anywhere between 20-75% of your outstanding balance. The creditor will then forgive the remainder of your balance and most people can typically eliminate all of their debt within 12 to 36 months.

In the meantime it is a good idea to start saving money towards the debt settlement and stop paying your creditors. After you have settled your debts, take advantage of the free credit report you can access every year. Your settled debts will reflect a zero balance, but your history of delinquencies will remain.

It is important to understand that this process will ruin your credit, but if you have so much debt that you cannot make the payments, the last thing you need is to apply for more credit. Or, an even worse idea would be to use credit to pay off debts, only to make your situation worse. Creditors will still call you and try to bully you into paying. It is important that you notify them that you are in a debt settlement program and redirect their collection efforts to the debt settlement company for quicker resolution of your unsecured outstanding debt.

It is important that you cut back on your spending habits and work your way out of debt. Once the debt has been settled, get into a credit repair program to build your credit back up, a process that will only take you about a year. It is a process, but one that is well worth it.
About the Author
Christina Costa, a freelance debt settlement writer, recommends Equotegrabber - where you can get a free debt repair quote online in seconds! Visit Equotegrabber.com
Rating:
Please Rate:
(Average: Not rated)
Views: 151
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources